Introduction and context Rohan Samarajiva Colombo, 04 March 2014 - - PowerPoint PPT Presentation

Introduction and context

Rohan Samarajiva Colombo, 04 March 2014

This work was carried out with the aid of a grant from the International Development Research Centre, Ottawa, Canada.

About us…

• Our mission:

– “Catalyzing policy change through research to improve people’s lives in the emerging Asia Pacific by facilitating their use of hard and soft infrastructures through the use of knowledge, information and technology.“

• Since 2004, working mostly in ICT infrastructure

2

Countries that we engage with

• Our Team (this part of the project):

– Rohan Samarajiva, PhD – Helani Galpaya – Shazna Zuhyle – Nilusha Kapugama – Ranjula Senaratne Perera – CKS Consulting (India)

4

– Usha Ramachandra, PhD – Rajkiran Bilolikar – Pial Islam – Payal Malik – Vignesh Ilavarasan, PhD – Roshanthi Lucas Gunaratne

Center for Knowledge Societies

• CKS is an innovation consulting practice that employs

user-centered research and design methodologies, including ethnography, design analysis, and user experience, to help organizations systematically and routinely create products, services, and systems.

• The company has wide experience in India, but has

also worked in different emerging economies worldwide including South Africa, China, Nigeria, Philippines, Bangladesh and Indonesia

5

About the group that’s not here…

• Urban, low-income, micro-entrepreneurs

(MEs)

• Why low-income MEs?

– A group that is not visible to many service providers – ‘Lost’ between the Bottom of the Pyramid users and large corporates

• Why urban?

– A decade of urbanization. Continues

6

Studied three services consumed by Micro Enterprises

• With different levels of competitive provision

– Telecom: high levels of competition – Electricity: low competition/monopoly – (Municipality Delivered) Government Services (e.g. business registration): monopoly provision by govt.

• Different levels of ICT use

– Telecom: high use – Electricity, Govt services: lower

7

How MEs be better served?

• What are current levels of customer-centricity in

each sector?

• Can we identify ‘best-fit’ practices from one

sector that could work in the other?

– E.g. Telecom seems to use ICT-based communication to deal with consumers. Can electricity do the same?

• Can practices from one country be adapted to

work in another

– Three countries: Sri Lanka, India, Bangladesh

8

Research methods

• First: from the supplier point of view

– How are customers served? How is the relationship managed? – Interviews with the service providers + Desk research

• Then: from user point of view

– What is used? What are problems? Satisfied? – Quantitative: Sample survey of 3,180 MEs – Qualitative: in-depth interviews/other research of 76 participants and 12 ethnographies at sites of service provision.

9

Why do we care?

• Not all MEs remain MEs for-ever
• Some grow

– Into SMEs (small/medium enterprises) – Even into large enterprises

• Economic growth happens when this journey

takes place

• What can we do to catalyze it?

10

Why should you care?

• These are valuable customers today

– Low income MEs consume more telecom and electricity than an average bottom of the pyramid (BoP) consumer – They are less ‘fickle’: e.g. fewer dual SIM than BOP

• These are potentially even more valuable

customers in the future

– Be their partner from the beginning

11

Plan for the rest of the morning

• Rohan Samarajiva

– setting the stage and learnings from quantitative and qualitative research

• Nilusha Kapugama

– possible solutions for electricity

• Audience

– critique of solutions

12

Where does electricity fit within constellation of public services

User pays Paid for by taxes Collectively consumed E.g., Non-toll roads, maintained through fuel taxes? E.g., Early warnings of disasters Law and order National defense Vaccinations against infectious disease Individually consumed E.g., Public utility services Passports E.g., Welfare payments Pensions

13

Users pay for service; no real alternative available

• Exit, the normal consumer response to

problems in quality of service, is not available

– Except for large users, who may invest in self- supply

• Voice is only available response

– Direct complaints to supplier – Complaints through media – Complaints to regulator – Complaints to political authorities

14

Downsides of being sole supplier

• Obligation to serve, even if uneconomical

– Many customers pay less than cost of billing – But managers are expected to not incur losses

• Cannot get rid of unattractive customers
• Voice (direct and indirect) tends to be loud

– Frustration levels are higher

15

Therefore,

• CEB should, as it is doing now, pay special

attention to

– Understanding its customer base – Differentiating among different categories of customers – Providing appropriate solutions to customers

• Reduce the need to complain
• But for the complaints that do come: have good

channels & response; also treat complaints as data useful in improving your systems

16

Differentiation of service

• Government and its agencies cannot

discriminate

– But this does not mean it cannot treat different classes differently

• Large industrial customers are, and should be, treated

differently from <90 unit customers

• Classes must be rational  based on evidence
• Within a class, treatment must be the same

17

Example: Passports

• Absolute monopoly, enforced by law
• Perhaps considered one of the most efficient

government services

• Classes exist, e.g.,

– Middle East Only; All countries – Regular; One-day – Normal; official – Head Office; decentralized

• Different payments; different service quality

18

Electricity

• Differentiate, rationally

– Not only in prices offered – But also in other aspects of customer relationship management

19

Stories from the field: studying urban, poor micro-entrepreneurs

Rohan Samarajiva Colombo, 04 March 2014

This work was carried out with the aid of a grant from the International Development Research Centre, Ottawa, Canada.

Definitions

• Micro-entrepreneurs (MEs) = those employing

0 -9 employees

– paid part or full time workers – inclusive of family members)

• Low income = MEs in socio-economic

classification (SEC) C, D and E and B1,B2, (for those employing 1-9 employees)

– SEC based on education and job – Close correlation to income

• Urban = definition used by the National

Statistics Office in each country

A ‘weak city’ and ‘strong city’ in each country identified

• Strong/weak determined by proxy indicators

– Sri Lanka: various poverty measures by province – India: City Competitiveness Ranking by state – Bangladesh: poverty + literacy + electrified households

• In Sri Lanka

– Western Province: Colombo – North Western province: Kurunegala, Kuliyapitiya, Puttalam & Chilaw

• India: Delhi and Patna (in Bihar)
• Bangladesh: Dhaka and Ghaibanda+Kurigram

Quantitative study: 3,180 MEs surveyed

460 641 501 455 638 485

Bangladeshi cities Indian cities Sri Lankan cities

Dhaka Kurunegala, Kuliyapitiya, Puttalam & Chilaw Colombo Delhi Patna 915 1279 986 Gaibandha & Kurigram

No country had registry of MEs. Best possible source used to determine quotas

• Sri Lanka: Census of Industry (2003/2004) by

Department of Census and Statistics

– Used to determine % male/female in sample – Used to determine business type (i.e., % retail, manufacturing, retail)

• India : Non-agricultural Enterprises in the

Informal Sector, 2000. Survey

• Bangladesh: Economic Census

More on sampling method

• In each country, two locations were selected. The capital city and

another city which is weaker in terms of governance.

• The respondents for the study were selected through a probability

sampling method. In Sri Lanka, the A-Z map book published by The Survey Department of Sri Lanka was used. The entire province is divided into square blocks.

• The blocks were given numbers and using a random number table,

blocks were selected.

• In each block, respondents were found first at the northwest corner

and then subsequent interviews were conducted in the same block by continuous walking.

Qualitative research after the survey to understand why and to re-design

• The survey: answers the WHAT questions
• Qualitative research:

– answers WHY questions – for envisioning (better) solutions

• A qualitative study with 76 participants

conducted as in-depth interviews, ethnographies and focus groups and 12 ethnographies at sites of service provision

– Day ethnographies at sites of service provision – In-depth interviews with service providers – In-depth interviews with MEs – Community group design activities

The Sri Lanka (LK) sample older, more educated and more female compared to India (IN) and Bangladesh (BD)

Bangladeshi cities Indian cities Sri Lankan cities

Average age

36 36 42

Female micro-entrepreneurs

9% 12% 26%

Illiterate or primary schooling only

39% 87% 29%

LK had the most numerate MEs. Over 90% can do calculations

14% 19% 69% 46% 81%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

I can calculate interest rates, tax calculations etc. I can do simple addition, subtraction & multiplication etc. I can read and write numbers but cannot do any calculations I can recognize numbers but cannot write them I cannot recognize or write numbers

Please tell me about your numerical abilities (as % low-income MEs)

More than half the MEs in LK are in trade

7% 38% 13% 25% 30% 34% 68% 33% 53%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Manufacturing Services Trade

Type of business (as % of low-income MEs)

81% of MEs in LK have a fixed location

8% 24% 13% 71% 17% 41% 13% 11% 48% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

Others Variable location for which I do not pay Variable location for which I pay From a fixed location that I rent, outside my home From an fixed location that I own, outside my home From a part of my rented home From a part of my home that I own

Could you tell us where your business is located? (as % low-income MEs)

Most businesses started using savings. Formal loans most common in LK

47% 68% 47%

25% 7% 14% 12% 19% 17% 11%

9% 5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Own savings Inherited Gifted Borrowing from friends and relatives Bank loan Loan from a local money lender/NGO/Other Sale or mortgaged the assets

16%

How did you get the money to start your business? Tell the main source (as % of low-income MEs)

Access to bank accounts highest in LK

12% 70%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Bangladeshi cities Indian cities Sri Lankan cities Separate bank account just for business Personal bank account

Does your business have a separate bank account to use just for business purposes?(as % of low- income MEs) Do you have any bank account in your name? (as % of low-income MEs)

All MEs normally deal with cash

How do you normally do make or receive payments in your business? [MC] (as % low-income MEs)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cash Cheque Online banking Mobile Money transfers Informal handwritten notes Bangladeshi cities Indian cities Sri Lankan cities

Extra income will be used for both personal and business use

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Can't say Both Only home use Only business

If you have extra income / profit from business, will you utilize it for business or home use? (as %low-income MEs)

ELECTRICITY AND TELECOM USE BY MICRO-ENTREPRENEURS

38

Many have an electricity connection which they use for business

Do you have an electricity connection which you use for business purpose? Where electricity can be from the grid, solar, generator and other sources ( % low-income MEs)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

39

Most MEs use mobiles for business

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Landline (including CDMA) Mobile phone Computers/laptop Internet via computer Internet via mobile Bangladeshi cities Indian cities Sri Lankan cities

Do you use _________for your business related activities? (% low-income MEs)

Majority of MEs use pre-paid mobiles

Is your mobile phone connection pre-paid? (% low-income MEs who use mobiles for business)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

41

Those who don’t have electricity don’t see a need for it

What is the main reason for not having electricity connection for business? (% low-income MEs who not have electricity for business)

84% 16% Use electricity for business Don't use electricity for business

84% 90% 77% 4% 6% 12%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

Others It's too expensive for me No source of electricity in my area I cannot get a connection as I do not have required documentation I have no need for it

42

Majority of those without a need for electricity operate from a variable location

Location of the business (%BOP who don’t need electricity for business )

43

12% 13% 22% 84% 66% 45%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Others Variable location for which I pay From a fixed location that I rent, outside my home From an fixed location that I own, outside my home From a part of my rented home From a part of my home that I own

67% of those who have electricity have a separate connection in LK

Do you have a separate electricity connection separate for your business? (% low-income MEs who use electricity for business)

51% 57% 67% 49% 43% 33%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Separate connection for business Shared connection for business

44

49% in LK have a separate connection for business because it is a requirement

7% 51% 19% 55% 39% 49% 37% 9% 32%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

Other I got it because I want to keep my business expense separate from personal expenses I am required (by the landlord/government/third party) to get a separate connection for business It's cheaper than any other connection

Please tell us the most important reason for having a separate electricity supply for your business? (% low-income MEs who have separate connection for business)

67% 33% Separate connection for business Shared connection for business

45

Many LK have a shared electricity connection because of ease

Please tell us the most important reason for having a shared connection [as a part of home or somebody’s home/business] for your business? (% low-income MEs who have a shared connection for business)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

I don't have a choice It's easier than having two connections I cannot get a connection as I do not have required documentation It's difficult to get any other connection It's cheaper than any other connection

67% 33% Separate connection for business Shared connection for business

46

Battery/ generators mainly used in IN

Who is the main supplier of electricity to you? (% low-income MEs who use electricity for business)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Electricity company Battery Diesel generator Solar

47

Is the electricity connection in your/or your business’s name? (% low-income MEs who use electricity for business with supply from electricity co.)

37% of LK MEs have the connection in their name

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Connection is in ME's or businesses name Connection is not in ME's or businesses name

48

Most can’t change the name because connection is in landlord’s name

Please tell us the most important reason for not having connection in your name (% low-income MEs who don’t have the connection in their name)

37% 63% Connection is in ME's name Connection is not in ME's name

41% 9% 11% 13%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

I do not want to say It's in my parents/ spouses name No particular reason Procedures are too long I do not have necessary documents to obtain it in my name It's in the landlord's name and I can't change it even if I wanted Connection was already there and I didn't change ownership

49

Amongst grid electricity customers LK MEs pay more than double compared to others

50

5 10 15 20 25 Bangladeshi cities Indian cities Sri Lankan cities Avg monthly payment: Electricity Avg monthly recharge: Telecom

LKR 3297 LKR 1345

How much is your average monthly electricity bill and mobile recharge (prepaid)? (% low-income MEs who use electricity and telecom for business with supply from electricity co.)

USD

Most LK MEs pay to the company itself

What is the most frequent used method of payment for your electricity consumption? (% low-income MEs who use electricity for business with supply from electricity co.)

61% 9%

21%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Physically go and pay to electricity company Pay to a company designated payment point Online to electricity company Pay via mobile to the electricity company Bank/post office Pay to landlord Pay to third party (may include neighbours) I don't pay anyone

51

94% of MEs in LK get a bill

Do you get an electricity bill? (% low-income MEs who use electricity for business with supply from electricity co.)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Gets a bill Don’t get a bill Not applicable

52

79% in LK satisfied with information in bill

Are you satisfied with the information in your bill? (% low-income MEs who receive a bill)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Can't say Not satisfied with information in bill Satisied with information in bill

94% Gets a bill Don’t get a bill/ NA

53

Energy efficient lighting: most popular money saving method

Please tell us about your most important step in conserving energy [reducing electricity bill] you have been following?(% low-income MEs who use electricity for business with supply from electricity co.)

75% 34% 61%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Have not done anything Switched to energy efficient light bulbs Turn off unnecessary appliances/lights Run appliances at off peak rate hours Other

54

More information needed on how to reduce electricity bill

My electricity bill has risen lately. Since I am the only earning member of my family, things are difficult for me. I switch off my refrigerator when I am not using it, but I would like to know more about how else I can reduce my electricity bill. Name: Nazreen Rilaya Age: 46 years Location: Colombo Education: Grade 4 Occupation: Food business Number of Employees:0 I require electricity for my business since I run my business from home. Any increase in my costs will adversely affect my business.

55

Blackouts and voltage fluctuations most common problems in LK

Did you face this problem? (% low-income MEs who use electricity for business from electricity co.)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Blackouts Voltage fluctuations Meter malfunction Delayed bill Inaccurate bill Bangladeshi cities Indian cities Sri Lankan cities

56

Blackouts and voltage fluctuations most common problems faced

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Blackouts Voltage fluctuations

Please tell us whether you faced these problems in the last 2 years. (% low- income MEs who use electricity for business from electricity co.)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

Did you complain about this problem? (% low- income MEs who faced those problems)

However few complained about it

57

MEs say blackouts affect their business severely

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

Do blackouts affect your business severely? (%BOP MEs who faced blackouts)

58

Faced blackouts Did not face blackouts

Many LK MEs do not use alternatives during blackouts

For business purposes, what is the most commonly used alternative to manage power black outs? (% low-income MEs who use electricity for business)

41%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi ciites Indian cities Sri Lankan cities Candles Battery operated inverter Diesel / oil based generators Oil lamps Solar based inverters Others I don't use any alternative source

59

Most see no use of complaining to DISCOs

Why did you not complain to the service provider? (% low-income MEs who use electricity for business)

79% 64% 80% 9% 7% 4% 6% 10% 7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Others I am scared to complain I do not interact or pay to the service provider but interact or pay to my landlord/third party I do not know the process to complain I do not know how to contact them It's of no use/ not worth complaining

Did not complain about any problem Complained about any problem

60

83% in LK did not think it was any use complain about Telecom services

Why did you not complain to the service provider? (% low income MEs who faced problems but didn’t complain)

35% 65% Complained about problems

61

71% 49% 83% 27% 51% 15%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Others I am scared of them I do not know how to contact them It's of no use/ did not think it was worth complaining

In LK only 1 out of 3 complained about any telecom problem

Have you complained about these problems to the telecom service provider? (% low-income MEs who have mobile related problems)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

62

Majority in LK have not interacted with the electricity service provider

Have you ever interacted/talked with the electricity service provider?- NO (% low-income MEs who use electricity for business)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cites Indian cities Sri Lankan cities

63

Most MEs do not interact with telecom service provider

8% 30% 10% 65% 38% 50% 9% 17% 20%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Can't remember Never More than a few months ago Few months ago 0-4 weeks

When was the last interaction with the service provider? (% low-income MEs who use mobiles for business)

64

MEs in LK mainly complained to the Distribution company

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Other I will not go to anyone Local electrician Landlord or other person in whose name the connection is registered Hotline / Customer care centre Office of the Electricity Company / depot

For the main problem with electricity you complained about, whom did you complain to? (% low-income MEs who complained)

Did not complain about any problem Complained about any problem

65

Phones the most common way to complain about electricity problems in LK

For the main problem with electricity you complained about, how did you complain? (% low- income MEs who complained)

0% 20% 40% 60% 80% 100%

Bangladeshi cities Indian cities Sri Lankan cities Other Letter Email Informal talk

Did not complain about any problem Complained about any problem

66

69% in LK interact with telecom service provider through call center

56% 92% 69% 38% 7% 28%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Others SMS Walk-in to the authorized agent / operator's stores Through the call center

How do you normally contact your telecom service provider? (% low-income MEs who have interacted with service provider)

30% 70% Have interacted with service provider Have not interacted or can't remember

67

Unsatisfied with the action taken for electricity problem complained about

For the main problem with electricity you complained about, were you satisfied with the action taken? -NO (% low-income MEs who use electricity for business who complained about a problem)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

Did not complain about any problem Complained about any problem

68

Majority in LK do not get an advance notice about power cuts

Do you get advance notice about power blackouts? - NO (% low-income MEs who use electricity for business)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

69

Public announcements the method of getting through to most about power cuts

How do you get advance notice about power blackouts? [MA] (% low-income MEs who get advance notice)

42%

70

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Sri Lankan cities Through newspapers Through radio or TV Through posters/notices Through neighbours Through friends /relatives Through Public announcements

Radio/TV only seen in strong city LK

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Strong city Weak cities Sri Lanka Through newspapers Through radio or TV Through posters/notices Through neighbours Through friends /relatives Through Public announcements

How do you get advance notice about power blackouts? [MA] (% low-income MEs who get advance notice) Sri Lankan cities

71

42%

Uninformed power cuts affect my business

Name: Mihiri Perera Age: 30 years Location: Colombo Education: Grade 9 Occupation: Beautician I have been running my business for the 3

• years. My business requires a lot of
• electricity. I find it challenging to pay back

“ Electricity is essential for my

• business. I am unable to serve my

clients if there is no electricity. Lack

• f information about power-cuts

affects my livelihood.”

72

Overall satisfaction for the services provided by DISCOs can be higher

Sri Lankan cities It is easy to find the locations where payment can be made

66%

Information on procedures and documents to get new connection was readily available

55%

I was treated politely by their office / call center personnel

55%

Information on how to contact the service provider is /was readily available

46%

Information on procedures to reconnect was readily available

45%

The amount of time I need to wait to get a new connection is satisfactory

44%

Amount of time taken to reconnect was satisfactory

39%

The waiting time to reach a concerned officer was appropriate

38%

Information about the procedure for changing ownership of a connection was readily available

32%

The amount of time I need to spend to change the ownership of the connection satisfactory

30%

Interacted with provider Have not interacted with provider

Experience with the service provider- YES (% low-income MEs who have interacted with the provider)

73

I don’t know how to get an electricity connection myself

I had initially approached a middle man for my electricity connection. However even after paying money I had to wait for over six months for my connection. Eventually I had to approach someone else to help me get my electricity connection. Name: Hasan Ul Rashid Age: 37 years Location: Dhaka Education: Grade 9 Occupation: Welding business Number of Employees:2 My business is dependent upon electricity.

74

No one picks up the phone at the electricity company

Once there was a major electricity shortage in this area. We called the

• ffice, but no one picked up, We had

no choice but to go to the office

• urselves to register our complaint.

Name: Ram Kumar Age: 24 years Location: Patna Education: Grade 9 Occupation: Food business Number of Employees:0 My business is very important for my

• livelihood. But when such disruptions

happen my business suffers.

75

Higher use of SMS and social apps in LK

Bangladeshi cities Indian cities Sri Lankan cities

SMS 43% 28% 49% Games 38% 37% 22% Video recorder/ camera 42% 30% 21% Touch Screen 11% 12% 9% Dual SIM 22% 19% 9% Mobile Internet 7% 3% 7% Apps for social networking 5% 1% 7% MMS, picture messaging facility 6% 2% 5% Email 3% 1% 4% Google Maps 3% 1% 3%

Features normally used (% low-income MEs who use mobiles for business)

76

What can be done? Electricity sector

Nilusha Kapugama 04 March 2014

This work was carried out with the aid of a grant from the International Development Research Centre, Ottawa, Canada and the Department for International Development , UK.

Most see no use of complaining

79% 64% 80% 9% 7% 4% 6% 10% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Bangladeshi cities Indian cities Sri Lankan cities Others I am scared to complain I do not interact or pay to the service provider but interact or pay to my landlord/third party I do not know the process to complain I do not know how to contact them It's of no use/ not worth complaining

Why did you not complain to the service provider? (% BOP MEs who use electricity for business and who faced problems but didn’t complain)

Increase information

• n how to get

in touch with the utility

78

Blackouts and voltage fluctuations most common problems in LK

Did you face this problem? (% BOP MEs who use electricity for business from electricity co.)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Blackouts Voltage fluctuations Meter malfunction Delayed bill Inaccurate bill Bangladeshi cities Indian cities Sri Lankan cities

79

The Beauty Parlour Owner Inside the Beauty Parlour

Problem: Lack of information on power-cuts

Name: Mihiri

Gender: Female Age: 30 years Education: Secondary Education Location: Colombo Business: Services– Beauty Parlor Employees: None Years of Service: 3

• Runs her business from rented

accommodation

• Has an electricity connection.
• Electricity is essential for her business.
• Unable to serve her clients if there is

no electricity.

• Lack of information on power-cuts has

an adverse effect on her livelihood.

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Problem: Called but no response…

My electricity bill has risen lately. Since I am the only earning member of my family, things are difficult for me. I switch off my refrigerator when I am not using it, but I would like to know more about how else I can reduce my electricity bill Name: Fatima Rilaya Age: 46 years Location: Colombo Education: Grade 4 Occupation: Food business Number of Employees:0 I require electricity for my business since I run my business from home. Name: Santosh Kumar Age: 24 years Location: Patna Education: Grade 9 Occupation: Food business Number of Employees:0 My business is very important for my

• livelihood. But when such disruptions

happen my business suffers.

Once there was a major electricity shortage in this area. We called the office, but no one picked up, We had no choice but to go to the

• ffice ourselves to register our

complaint.

Communicate with your customer…

• Communication is two way

– Utility needs to let customer know about planned and unplanned outages – Customer needs to talk to the utility to get information or make a complaint

• The need for efficient and professional service
• Managing the expectations of your customer

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58% in LK do not get an advance notice about power cuts

Do you get advance notice about power blackouts? - NO (%BOP MEs who use electricity for business)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities

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The consumer being made aware of planned outages through multiple methods such as public announcements, newspapers, SMS and electronic media. If unplanned outage, use medium such as SMS to convey the information to consumer

Solution: Provide Information on Blackouts

SMS

When setting up SMS services ensure that the sign up processes are not complicated Ensure the services receive sufficient publicity to enable sign up Use the bill as a method of sending information

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Problem: Called but no response…

My electricity bill has risen lately. Since I am the only earning member of my family, things are difficult for me. I switch off my refrigerator when I am not using it, but I would like to know more about how else I can reduce my electricity bill Name: Fatima Rilaya Age: 46 years Location: Colombo Education: Grade 4 Occupation: Food business Number of Employees:0 I require electricity for my business since I run my business from home. Name: Santosh Kumar Age: 24 years Location: Patna Education: Grade 9 Occupation: Food business Number of Employees:0 My business is very important for my

• livelihood. But when such disruptions

happen my business suffers.

Once there was a major electricity shortage in this area. We called the office, but no one picked up, We had no choice but to go to the

• ffice ourselves to register our

complaint.

Current system have trade-offs and creates confusion

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Pros Cons Area engineer’s

• ffice
• Customers feel as if they

have spoken to someone with authority

• Lack of accountability as

reference numbers are not always given

• Under-trained staff
• Unanswered calls
• Takes up valuable time of

the area engineers Centralised call centre

• Effective management of

customers by trained staff

• Maintenance of historical

data on customer complaints/inquiries

• Establishment IVRs for

information provision

• Lack of a personal touch

Solution : A dedicated call center for receiving complaints/inquiries

• Maintain dedicated call centers
• Remove discretion from the complaints receiving process by accepting all complaints and

issuing a reference number.

• Record calls so that the Supervisors can keep track of interactions.
• After the query has been resolved, the consumer can rate the Service Provider via SMS.

Consumer can rate the Service Providers response to the query via SMS

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Do more with call center data

• Distribution companies already have

SAIDI/SAIFI data originating from the system

• The call centre data can be analysed together

with the system generated data for more in- depth understanding of issues such as breakdowns and voltage fluctuations

• Walk-in complaints should also be digitised to

make the analysis more complete

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Problem: insufficient info on effective consumption of electricity

My electricity bill has risen lately. Since I am the only earning member of my family, things are difficult for me. I switch off my refrigerator when I am not using it, but I would like to know more about how else I can reduce my electricity bill. Name: Nazreen Age: 46 years Location: Colombo Education: Grade 4 Occupation: Food business Number of Employees:0 I require electricity for my business since I run my business from home. Any increase in my costs will adversely affect my business.

About 80% of consumers have done something to reduce their power consumption

Please tell us about your most important step in conserving energy [reducing electricity bill] you have been following?(% BOP MEs who use electricity for business with supply from electricity co.)

75% 34% 61%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bangladeshi cities Indian cities Sri Lankan cities Have not done anything Switched to energy efficient light bulbs Turn off unnecessary appliances/lights Run appliances at off peak rate hours Other

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Saving a small percentage of energy can produce large savings in expenditure. Source: LIRNEasia research based on PUCSL reports

Last 5% of supply needed to meet present peak demand is as expensive as first 50% of supply

49%, 17% 95%, 83% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of Cost incurred by CEB Share of Energy Purchased by CEB

When 5% = 50% (2011)

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Implementing DSM…

• DSM is defined as “modification of consumer

demand for energy through various methods such as financial incentives and education”

• Many new learnings emerging from the field
• f behavioral economics

– Behaviors of human beings change in response to nudges – Human beings not always rational: How information and choices are framed matters!!!

• Sunstein, C. R., & Thaler, R. (2008). Nudge: Improving

decisions about health, wealth, and happiness. New Haven: Yale University Press.

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From theory to practice…

• Richard Thaler (Prof of Behavioural Science

& Economics at the University of Chicago; co- author of “Nudge”) now works with British Government.

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People tend to change behavior when they get timely and specific feedback

• Keep telling them how much they are

spending

– Best solution:

• Install smart meters that displays the RUPEE value of

current consumption (not current kWh consumption)

– Second best (without smart meters):

• Implement a system where users are able to find out

their current amount payable via SMS

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Best Solution…smart meters!

• Smart meters will enable time of day metering [and cost

reflective pricing]

• Bill shock will lead to lowering of the daily peak demand for

energy

• Some consumers will be able to manage their consumption

more efficiently

• Overall daily demand may stay the same but consumption

may shift to a different time Some companies have gone an extra step just to give feedback...Just a light that flashes during high use is sufficient

– PG&E’s Energy Orb program – For business customers – During peak load times, turns red/flashes

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Second best solution… amount payable via SMS

• Real-time feedback has an impact

– Most consumers only find out their consumption when they receive the bill – Often results in bill shock; too late to make changes to consumption – Bill calculators available online. However, these are not accessible for all – Why not let people find out their consumption real-time (when they want) through SMS

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Text number of units and number

• f days since the last billing date to

designated number Receive current amount payable

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2 possible systems…

• The format of the SMS has to be specified and printed on the

monthly bill or put up as a sticker on the meter

Do a one time registration with the distribution company <Mobile phone number gets linked with the electricity account number> Text in current meter reading <Utility has information about the last billing date and the last meter reading> Receive current amount payable

A basic solution An advanced solution

People judge their wellbeing relative reference points, and care about what other people think about them

• A reference point they have experienced before, or

what other people are doing (social norms)

• “75% of this hotel’s guests reused their towels” more

effective in increasing reuse of towels than saying “partner with the hotel to save the environment” or “preserve our resources for the future”

• If you want consumers to use less electricity

– Compare their consumption with those (in their neighborhood) who consume less than them – When users DO manage to reduce consumption, recognize this (smiling face/message printed in their bill)

• Singapore: running trials with bills that provide monthly

national average costs for electricity for similar households .

1) Cialdini, Robert, Goldsetein and Griskevicius. 2008. A room with a viewpoint: using social norms to motivate environmental conservation in Hotels. Journal of Consumer Research, Vol 35, pp 472 - 482

Creating greater awareness of consumption

Inform high energy users that their consumption is higher than average when compared to their neighbours (single phase vs 3 phase) infographic on the meter. The infographic should be in the local language. Information through the bill.

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People are psychologically invested in costs they have already paid (sunk cost) regardless of current costs/benefits

• Makes it harder for them to throw out non-

energy efficient items such as old, energy- inefficient refrigerators

• Need to frame incentives

– Exchange programs that say “Receive Rs. 5000 in return for your old refrigerator” – As opposed to “Receive a Rs. 5000 deduction when you buy a new energy efficient refrigerator”

People are bad at evaluating a large number of options

• r complex information. They tend to do nothing
• Limit choices

– E.g. promote 3 types of CFL bulbs, not 8 – Provide a limited number of energy saving tips, not exhaustive lists in your brochure

• Inform people of approximate electricity

consumption of household appliances

– Ensure it is framed in a way easily understood by the consumer

• E.g., No. of units used by appliances (instead of KWh)

Solution: More information through bills

Bills have approximate number of units consumed for various appliances.

Eg: 1 fan for 10 hours = 2 units

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People tend to put off actions that only impose costs or give benefits in the long term

• They want to exercise, but negative effects of not exercising

are not seen day to day

• They want to save, but need other “nudges” to get them to
• save. E.g. Commitment Devices

– Group A: offered “Flexible Savings Account”

• with 10% PA interest, and you can take your money out at any time

(no penalty fee)

– Group B: offered “Commitment Savings Account”

• with 10% PA interest, but you can’t take it out for 2 years

– Which plan had more take up?

• They want to save energy, but will put off installing energy

saving features in homes to the future

– What can be done?

Ashraf, Nava, Dean Karlan, and Wesley Yin (2006). “Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines.” Quarterly Journal of Economics, Vol. 121, No. 2, pages 673-697

Experimenting with nudges…

• Nudges” trialed by the Energy Market

Authority (EMA), Singapore can be found in

– Low, D. (Ed.). (2012). Behavioural Economics and Policy Design: Examples from Singapore. World Scientific – Chapter on electricity available at http://www.ema.gov.sg/media/files/publications/ Behavioural%20Economics%20n%20Policy%20Des ign-%20Examples%20from%20Singapore_Ch- 05.pdf

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For my house I have a shared electricity connection with my

• neighbor. Irrespective of how

much electricity I consume, I make it a point to pay a higher amount of the bill so that my neighbor is happy and I can continue to avail of my electricity service.

Name: Asanka Age: 35 years Location: Colombo Education: Grade 4 Occupation: Dried Fish Seller Number of Employees:0 Electricity is extremely important for me. I run my business from my house, and I also have a small child at home.

Problem: Inability to establish ownership/occupancy

• f property to get an electricity connection

Existing regulations does not allow supply of electricity to those unable to prove occupancy or

• wnership, therefore this requires a change in law.

It will ensure that having an electricity meter does not automatically entail property rights

• ver time.

Provide a pre-paid connection to avoid any liability For those who require a post-paid connection, existing requirements should be streamlined and stated clearly with ambiguity.

Relaxing existing document requirements to enable MEs with temporary structures to acquire an electricity connection

Solution: Relaxing existing document requirements and issue pre-paid connections

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Solution: Prepaid Meters

The consumer can top up at a local vendor for a reload thus reducing costs for the electricity distribution company due to non involvement of the meter reader and bill prints. Reduces liability for the distribution company It ensures that consumers don’t suffer from bill shock

To enable easy top ups, super markets, small shops and agents (who presently sell mobile vouchers) are used to provide access to reloads Consumer reloads as per his requirement. SMS Your transaction has been successful

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Pre-paid contd…

• Prevents bill shock
• Reduces liability to the distribution company

– Reducing bad debt due to non-payment of bills – Reduces cost incurred during recoveries

• Reduces the cost of incurred during the billing

process

– Reduces cost of generating a bill – Reduces the need for more meter readers

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Pre-paid contd…

• Successfully used in India, piloting in

Bangladesh

• Can be used for numerous customer segments

– Rural households – Low user households – Rented properties (High and low end)

• Leverage existing systems used by telecom for

top ups/recharge

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In summary

Quick wins Little more time Long term

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Channel all complaints/inquiries to call centre

Communicate planned and unplanned outages more effectively Introduce Smart Meters (& TOD pricing) and pre- paid meters Send bold, repeated messages via bills Relax existing document requirements for those who lack documentation Implement SMS system to find current amount payable Begin programs for effective DSM Streamline document requirement

For more information on our research

http://lirneasia.net/projects/2012-2014-research- program/improving-service-delivery-for-e-inclusion/

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